There is a saying, “When an old man dies, a library disappears.” It refers to the knowledge and wisdom accumulated over a lifetime and the many experiences of one person. These precious elderly people immigrated to the United States and suffered all kinds of hardships and lived their whole lives raising children, but what remains are the difficult lives of their later years.
In a study titled “Life Satisfaction among Asian-American Seniors” by a research team at the University of California, Los Angeles (UCLA) recently published in the Journal of the American Academy of Family Medicine (ABFM), “only 54% of the sample of Asian Americans expressed satisfaction with their lives. This is significantly lower than the average satisfaction rate of other races of 80%, and the satisfaction of the elderly Koreans was the lowest among Asians. It’s really sad.
Most of the first-generation immigrants to the United States start their own business after working for other businesses. How difficult is it to earn a penny or two while raising children in a foreign land where the language is not free? He even risked his life to run a business, but his retirement life is very uncertain.
General office workers, civil servants, professionals, etc. can prepare relatively easy retirement plans. This is because investment schemes for retirement at work are generally in place. However, those who run a business must prepare for retirement on their own. Planning for retirement in a busy business environment can be a ‘easy to sell’ story.
In general, there is a limit to building wealth through labor. It is difficult to build wealth by running a business or self-employment, but it is even more difficult to continuously generate profits without working after retirement. But investment guru Warren Buffett said, “Your wealth should grow while you sleep. Otherwise, you have to work until you die.” What the hell does this mean?
The United States is an economic system that aims to pursue profits based on capitalism. All businesses, one of the economic systems, work hard to generate profits. It is only by owning the stock of a company that several companies work hard day and night so that investment money grows while I sleep.
Any investment has a return on it. When I tell people who run businesses a 7% return on investment, I don’t think it’s funny. The reason for this is that you can get 100% profit right away if you bring a piece of clothing for $25 and sell it for $50. However, this is the result of ‘seeing only one tree and not seeing the entire forest’.
One way to make the most of your retirement plan is to make the most of your retirement plan. Individuals who do not have a retirement plan or who are self-employed can invest through an Individual Retirement Arrangement (IRA). There are two types of investment: Traditional IRA and Roth IRA. Traditional IRAs offer tax deductions when investing, but when you retrieve the increased money, it is considered income and you pay taxes.
If you invest $6,000 (investment in an IRA) every year as a retirement plan with a 10% return, it will increase to $700,000 after 25 years and $1 million after 30 years. The reason you can raise so much money with a small amount of money is because of the compound interest effect. Even a small amount of money can be a huge help if you consistently invest for a long period of time. For reference, the U.S. stock market (S&P 500 Index) has averaged an average annual return of about 10% from 1926 to the present.
It is natural to reinvest in your business with the hope of making your business bigger. However, you must also prepare for old age. Investing in stocks doesn’t seem like a big deal at first, but over time it snowballs with compounding effects. Even while I am sleeping, my investments are invested in various companies and profits are created. With proper stock investment, we hope that profits will continue to be generated even after retirement, leading to a comfortable and comfortable retirement life for the couple.
Myung-Duk Lee, Ph.D., Registered Investment Adviser (RIA)
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